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Canada’s Inflation Rate Rose To 2.9% In May

In a surprise move, Canada’s inflation rate rose to 2.9% in May from 2.7% in April of this year.

Economists surveyed by Bloomberg Markets expected an annualized May inflation rate of 2.6%.

Statistics Canada said that the inflation rate ticked higher due to higher prices for services, which rose 4.6% in May from 4.2% in April.

In particular, higher prices for cellular service, travel tours, rent, and air transportation pushed up consumer prices across Canada.

On a monthly basis, inflation rose 0.6% in May, largely because of rise in costs for travel tours.

Prices for food purchased from stores rose 1.5% on a year-over-year basis in May following a 1.4% increase in April.

May marked the first increase in grocery prices since June 2023. Prices for groceries have now increased by 22.5% since May 2020 when the Covid-19 pandemic struck.

Core inflation, which excludes volatile food and energy prices, rose 2.85% from a year earlier in May, up from a downwardly revised 2.7% in April.

Across the country, inflation rose in six provinces during May, with the biggest increase occurring in Ontario.

Inflation growth in Ontario was led by rent prices, which rose 8.4% in May, up from a 6.1% increase in April.

The May inflation reading comes three weeks after the Bank of Canada lowered its benchmark overnight interest rate by 25 basis points to 4.75%.

Canada’s central bank was the first among the Group of Seven leading industrialized nations to lower interest rates.